On July 9, 2021, President Biden's U.S. Department of Education announced that $56.6 million of student loan debt will be canceled under the borrower defense to repayment rule for 1,800 defrauded borrowers who attended Westwood College, Marinello Schools of Beauty, or the Court Reporting Institute. Previously, President Biden discharged over a billion dollars in federal student loans for different types of borrowers, then canceled $500 million more in student loan debt for borrowers who attended ITT Technical Institute, and also provided debt relief to borrowers with defaulted Federal Family Education Loans (FFELs).
All of this student debt relief is in addition to pausing student loan payments, reducing interest rates to 0%, and halting all collections of student loans in default through September 30, 2021.
Loan Forgiveness Under the "Borrower Defense to Repayment" Rule
In 2016, the Obama administration set up a new loan forgiveness program to help defrauded student borrowers cancel their federal student loans. Under a federal law known as " borrower defense to repayment," if your school—say ITT Technical Institute or a Corinthian College, among others—misled you, deceived you, or engaged in other illegal misconduct that convinced you to enroll or remain enrolled, you can get a full discharge of the federal Direct Loans you took out to attend the school. (34 C.F.R. § 685.206).
Loan Relief for 1,800 More Defrauded Borrowers
Again, the Education Department has announced it is approving 1,800 borrower defense to repayment claims for students who attended Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. This is the first time since 2017 that the Education Department has announced approvals of borrower defense claims for students who attended institutions other than ITT Technical Institute, Corinthian Colleges, and American Career Institute.
Borrowers will get 100% loan discharges, amounting to around $56.6 million in cumulative loan relief. The approvals cover the following categories of claims that borrowers submitted.
- Misrepresentations about students' ability to transfer credits. The Education Department found that from 2002 through the school's 2015 closure, all of Westwood's campuses across the country misrepresented students' ability to transfer credits. The Department learned that students were generally unable to transfer their credits to other schools, resulting in them having to restart their education at different institutions.
- Misrepresentations about likely criminal justice employment prospects. The Education Department found that from 2004 until the school closed in 2015, Westwood made widespread, substantial misrepresentations to students that its criminal justice program would allow them to get jobs as police officers in Illinois, especially in the Chicago area. But the Chicago Police Department and other law enforcement agencies would not accept Westwood credits in their hiring processes.
Marinello Schools of Beauty
- Failure to provide the education promised. The Education Department found that from 2009 until the schools closed in 2016, Marinello Schools of Beauty made widespread, substantial misrepresentations about the instruction that it offered at its campuses across the country. Borrowers said that the schools failed to train them in the key elements of a cosmetology program, including how to cut hair, and left students without instructors for weeks or months. So, students had difficulty passing state licensing tests.
Court Reporting Institute
- Misrepresentations about the time it would take to finish the school's court reporting program. The Education Department determined that from 1998 through the school's 2006 closure, the Court Reporting Institute made widespread, substantial misrepresentations about how long it would take students to finish its court reporting program. Most students didn't complete the court reporting program and, as a result, were not able to become court reporters. Those students who did manage to graduate took considerably longer to do so than the school claimed it would take. The Education Department's findings cover all of the institution's locations, which were in Washington, California, and Idaho.
For more information about these and other borrower defense to repayment claims, go to StudentAid.gov/borrower-defense.
Earlier Student Loan Relief Under the Biden Administration
Since taking over the presidency, Biden has canceled about $3 billion of federal student loans. In addition to the loan forgiveness discussed earlier in this article, the Biden administration has:
Also, the American Rescue Plan Act exempts student debt forgiveness from federal taxation until January 1, 2026, and covers Direct Loans, FFELs, and private student loans.
Effective date: July 9, 2021